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November 14, 2014 / cbkingston

Pricing and Revenue Streams

Pricing Strategy

A business can choose between two pricing tactics when launching a new product:

  • Penetration pricing means setting a relatively low price to boost sales. It is often used when a new product is launched, or if the firm’s main objective is growth.
  • Price skimming means setting a relatively high price to boost profits. It is often used by well-known businesses launching new, high quality, premium products.
  • Customers. Price affects sales. Lowering the price of a product increases customer demand. However, too low a price may lead customers to think you are selling a low quality ‘budget product’.
  • Competitors. A business takes into account the price charged by rival organisations, particularly in competitive markets. Competitive pricing occurs when a firm decides its own price based on that charged by rivals. Setting a price above that charged by the market leader can only work if your product has better features and/or appearance.
  • Costs. A business can make a profit only if the price charged eventually covers the costs of making an item. One way to try to ensure a profit is to use cost plus pricing. For example, adding a 50% mark up to a sandwich that costs £2 to make means setting the price at £3. The drawback of cost plus pricing is that it may not be competitive.

There are times when businesses are willing to set price below unit cost. They use this loss leader strategy to gain sales and market share.

The above information is sourced from here.

Revenue Streams (7 types):

  1. Asset Sale………………physical products…………………………………….(cars, food)
  2. Usage Fee………………ability to use a service………………………………(minute-based cell phone plans)
  3. Subscription Fee……continuous access to service………………………(membership fees)
  4. Lending, Renting, Leasing..exclusive, limited-time right to a product……..(rental cars)
  5. Licensing……………….permission to use protected IP……………………(commercial use of music, labels)
  6. Brokerage Fees………intermediary services………………………………..(commissions on financial transactions)
  7. Advertising…………….right/space to advertise another product……..(billboards, product placement)

For more information on pricing and revenue, visit here.

October 22, 2014 / cbkingston

Friday’s Class: Campaign Report, Business Ideas/Markets

1) Report your campaign stats, along with why you think it behaved the way it did, what you could improve, etc. This is informal, and needs to be short (2-3 minutes). The combined team presentations are meant to take only 30 minutes in total. Presenting this from someone’s blog post is ideal.

2) Have your target market in mind for your business. I’m going to be introducing the partner companies who can provide manufacturing capabilities to you. Please investigate them beforehand: http://cricut.com and http://robofold.com and have some questions in mind. You do not have to use these resources, but at least one team should be using one of these businesses—minimum of one team using Robofold and another team using Cricut.

3) Business ideas: it was mentioned before but worth noting again that there are rules associated with your business ideas. This can be found on the module blog here: https://macekingston.wordpress.com/business-rules/ Please review this before your business idea/market is reviewed on Friday. Some tips:

a) Your target market should be accessible to your team. For example, don’t pick astronauts as your main customer, unless you can have access to them for feedback, user testing, etc.

b) The business needs to turn a profit before the end of March.

c) MONEY. No more than £1000 can be put into your business collectively. Instead, it’s assumed you will start with very little funds and then grow organically. No member can invest more than another member of the team. No one can own more than £25 worth of stock in the business. (Yes, you can sell shares, will discuss this on Friday in more detail).

d) Your first product must be made before Dragon’s Den, which is the first Friday of December. Note: don’t make a large amount, as the Dragon’s may give you feedback that will impact your product design/idea. The goal is that by the first week of December, you have identified through trial and error all of the difficulties in manufacturing your product.

October 10, 2014 / cbkingston

Design Thinking and the USER model

A link to my PhD. (The USER model starts on page 45ish)

User: understand people in a way that you have empathy for them on three levels: cognitive, emotional, physical. Think of ways you can work WITH them as part of a democratic design thinking process.

System: you can’t really understand the User until you see how they fit within the context of the people, objects, roles/skills and laws around them. What factors directly or indirectly impact how they think, feel or do a certain activity?

Using the design thinking systems triangle simply helps you map out the context of the user in a way that helps you to discuss, debate and experiment with possibilities.

Establish: throughout the process you’ll start to draw conclusions about what needs to be done, ideally based on what Users need rather than based on you want them to do. At some point you need to decide what your focus is, based on a meaningful solution that you want to create. The Establish stage is the time for formalising your objectives.

Realise: With objectives and insight in mind, you then make your ideas as tangible as possible. Having a tangible idea enables you to interact with the idea in a physical way, that invites others to join in the discussion and solution as a team. This is different than talking about the idea, as you can’t hold, edit or add to an idea in a group as effectively. Think of this as the difference between having a map to discuss the best route to take as a team, versus someone describing the possible routes through words and trying to gain synthesis and understanding of the best routes to take. The Realise stage is about using/producing physical objects to lead/explore the team’s thinking.

October 3, 2014 / cbkingston

Lemon Brief

You will launch your campaign(s) on Thursday.

You can launch them on any channel or number of channels you like.

I’ll be happy to put your photos and videos on my channels (pinterest, youtube, etc.) and highlight them on the main page. Just email me.

Friday, you will show to the class what you’ve done, and share the statistics you’ve gathered since it launched and what tools you used.

The link needs to go to http://knowyourlemons.com and include #knowyourlemons hashtag

You can use as many short codes as you like, especially if you are trying things on different social media channels (I used http://goo.gl as an example, tracks it only if you are logged in to a google account). Then you can compare the different behaviours of each. Just don’t forget to keep a note of which code belongs to which!

Blog about it too, and share your progress with the rest of us (and the world).

kylcampaignbrief

September 24, 2014 / cbkingston

How to make a post

This is how you write a blog post.

SONY DSC